Borr Drilling's Q2 net loss widened to $241.4M as Odin preparation costs mounted and debt refinancing triggered a $176M charge. Management expects a 'substantial' Q3 rebound with 23 rigs active and 73% of 2026 days booked at $134,000.
Alpha Score of 44 reflects weak overall profile with moderate momentum, poor value, moderate quality, moderate sentiment.
Borr Drilling swung to a deeper loss in the second quarter as the offshore driller absorbed preparation costs for the Odin rig, fuel and insurance increases tied to the Middle East conflict, and a West African credit provision. Adjusted EBITDA fell to $43.8 million from $88.5 million in the first quarter, while the net loss widened to $241.4 million from a $29 million loss.
Total operating revenue slipped 6% to $232.3 million, CFO Magnus Vaaler said, driven by a $21.8 million drop in day-rate revenue on fewer operating days and lower rates for the Odin, Gunnlod and Skald rigs. Operating expenses rose $31.1 million sequentially to $232.1 million, with the Odin as the largest contributor. The rig incurred $22.5 million in costs during the quarter, including $11.1 million more than in Q1, as Borr completed repairs, maintenance and regulatory work ahead of its U.S. Gulf contract. CEO Bruno Morand said the company received regulatory approvals for the Odin in mid-July, later than expected. The rig will spend another $6 million to $9 million on preparation in the third quarter before it becomes fully operational. Once running, Vaaler said regular Odin operating costs should settle at mid-$70,000 per day.
The wider net loss also reflected a $176.3 million loss on debt extinguishment tied to the company's refinancing. The charge included $123.7 million in redemption premiums and $52.6 million from writing off unamortized deferred finance charges. Financial expenses came to $236.5 million for the quarter. Separately, Borr recognized $10.8 million in credit losses related to a former West African customer, leaving a net zero recivable balance as of June 30.
Borr completed a major debt overhaul in the second quarter. It issued $300 million of 3.5% convertible notes due 2033 and repurchased most of its 2028 converts. It also placed $2.035 billion in senior secured notes – $1.1 billion of 8.75% notes due 2032 and $935 million of 9% notes due 2034 – and expanded its revolving credit facility to $250 million, cutting the margin to 3% and extending matury to 2031. Cash and equivalents were $223.6 million at quarter's end, giving it total liquidity of $473.6 million.
In July, Borr's 50/50 Mexican joint venture bought five premium jackup rigs from Fontis for $287 million. The price was funded with $237 million of non-recourse seller credit plus $25 million from each partner. Three rigs are contracted; two are already working. Borr expects to put roughly $15 million in working capital into the venture in Q3.
Contract coverage remained strong. The company had 24 of its 29 rigs contracted or commited as of the call, with 73% of 2026 days booked at an average day rate of about $134,000. Recent wins included a two-year extension for two Mexico rigs taking them into 2030, a one-year extension for the Prospector 1 in Ivory Coast, and a new binding letter award from Sarawak Shell for the Mist in Malaysia. The Gunnlod extended work in Vietnam through April 2027, and the Idun started a new contract there in July.
Management said it remains constructive on the jackup market long term, but Middle East conflict-related uncertanty has delayed tendering and contracting in that region. Morand noted modern jackup utilization held at roughly 90% globally, with demand holding up better in Southeast Asia, the Americas and West Africa. The elevated transition activity that hit the second quarter is largely done, he said, and Borr expects to average about 23 active rigs in Q3. Morand declined to give a specfic EBITDA forecast but said the level should be similar to Q1 and produce a "quite substantial" sequential profit recovery.
The key risk going forward is execution on the Odin. Every week of additional prep work costs mid-six figures and delays revenue from its contract, which runs firm into mid-2027 with options into 2029. At the same time, the $2.3 billion debt stack – much of it priced at 8.75% to 9% – constrains free cash flow even if utilization hits management's target.
Borr Drilling (BORR) listed on the New York Stock Exchange, focuses on premium jackup rigs for shallow to intermediate water depths. It operates 29 rigs.
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